I Trade FX Takes the Stand Last Friday I Trade FXâs response to the NFA regarding the complaint lodged against them was posted on the NFAâs website. Below are the details: http://www.nfa.futures.org/basicnet/Case.aspx?entityid=0367140&case=08BCC00014&contrib=NFA The Nine Lonely Whales Right off the bat I Trade comes out swinging in their response, denying that they had only 9 accounts with balances of $50,000 or more and insisting they had âsubstantially moreâ such accounts. They did not, however, deny the NFAâs statement that they had only 3,000 active customer accounts in total. The number of large accounts is of course an important part of this case. If I Trade only had 9 large accounts than surely they would notice any large transactions taking place amongst any of them. The NFAâs entire case rests upon the charge that I Trade did not take any action to report the suspicious transactions that were happening with the Olint accounts, among others. The Vetting of David Smith I Trade FX then sticks in the knife with a great line in response to the NFAâs repeated references to David Smith acting as a Principal in the firm. âRespondents admit that David Smith was listed as a principle of I-Trade starting on March 27, 2007, but only after the NFA took six months to conduct its due diligence investigation of Smith prior to approving Smith as a principal of I-Tradeâ¦â Ka-POW! I Trade is basically telling the NFA, âhey if this guy was so bad why the hell did you approve him to be a principal in the first place?â Gotta admire the moxie of I Trade as that takes some brass cajones to get up in NFAâs face like that. However, I could not find any response from I Trade FX in regards to the NFAâs charge that David Smith funded I Trade FX with almost all its operating capital in 2007. So it appears that I Trade is conceding that their company was basically bankrolled by David Smith during his tenure as principal. That in my opinion is the real sin for I Trade FX, that their company was using an alleged con manâs money to inflate their net cap numbers throughout 2007. David Smithâs Secret Bank Records As youâll recall in an interview conducted by Jamaican Radio David Smith claimed that he would have given NFA his bank records had he had the time to do so before changing his story and stating he couldnât turn them over for âlegal reasons.â I Trade FX states for the record that they simply did not have the legal authority to compel David Smith to provide NFA with the documents when they asked about them. So the question for David Smith remains âwhy would you not turn over your bank records? What legal authority was preventing you from doing this?â The Guts of the Complaint The main charge NFA is lodging in this complaint is that I Trade FX failed to notify authorities about suspicious activity going on in David Smithâs accounts, among others. Here is I Tradeâs response regarding the Olint account activity: Deny, deny, deny. In plain English it seems I Trade FX is telling NFA âwe arenât going to admit these transactions were suspicious and we donât believe we failed to file any Suspicious Activity Reports.â In another clever bit legal jujitsu I Trade FX bats down the charge that they didnât respond to certain âRed Flagsâ with this answer: The next several pages delve into the specific accounts in question with I Trade admitting some things, denying other things and refusing to comment on the rest. But Iâm skipping over this because it appears to me most of this legalese is âhe said, she saidâ type stuff that canât be proven until this case goes to trial. Also, it hurts my head. There is a reason I chose not to go to law school⦠But this caught my eye at the end: Brilliant! I Trade FX is accusing NFA of possibly violating federal law! Again, Iâm not a lawyer and I have no way of judging whether or not this is a legitimate line of defense, but once again I Trade is really taking it to NFA and from that perspective it does make for good entertainment. Could this be the reason NFA delayed posting I Trade FXâs answer? Well, if it is it appears their legal counsel rubbished this line of defense in the end by brazenly publishing the ANSWER last week. So now what? Well, I think this case will probably be decided by events on the ground. There are still far too many questions surrounding Olint and David Smith. If the Feds canât prove any financial wrong doing my guess is I Trade FX and NFA will settle the matter a few months from now. But if the Feds find some really nasty stuff on David Smith I canât imagine NFA will give I Trade FX a slap on the wrist. Lucky for I Trade FX they are not a public company or else their stock would be in the toilet. In the meantime, I am cautioning traders to take a wait and see attitude towards this besieged and embattled firm.
#NFA staff expects that the Board of Directors will adopt these revisions at its meeting on August 21, 2008 # Any ideas if these revisions have been adopted or not???
July CFTC Net Capital Report The CFTC has released its latest Adjusted Net Capital report. With less than two months to go before the NFA raises capital requirements to $10 million the Capital issue is once again front and center in retail forex. How does you firm stack up? http://www.cftc.gov/marketreports/financialdataforfcms/index.htm The following firms have net capital below $10 million Bacera $5,448,000 MG Financial $5,545,000 Forex Club $6,709,000 Advanced Markets $6,874,000 Hotspot $7,573,000 Ikon $8,088,000 Friedberg Mercantile $8,176,000 ACM $8,395,000 Easy Forex $9,630,000 No change in capital for Bacera and Money Garden (although Advanced Markets saw a small uptick while Forex Club saw a small downtick). Also, ACM is still reporting net capital below 10 million. One suspects they had no idea cap requirements were going up and it could very well be they have completely mistimed their entry into the U.S. market. ACM appears to have brought a knife to a gun fight⦠Typical of a Swiss firm isnât it? The following firms have net capital below $20 million ODL $10,500,000 GFS Forex $11,296,000 MB Trading $12,201,000 Alpari $12,810,000 IFX $14,941,000 I Trade FX $16,214,000 CMS Forex $17,996,000 FX Solutions $18,887,000 The following firms have net capital above $20 million PFG $21,695,000 Interbank FX $33,341,000 Gain Capital $67,077,000 GFT Forex $69,497,000 FXCM $78,503,000 Oanda $164,523,000 As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new law going into effect in less than two months.
I am new to forex and now need to open an account. (Trading stocks for 30 plus yrears) I have tried 8 different broker practice accounts over the last 6 months and have narrowed it to three that I can work with. I day trade, $50,000 account, please list in order of prefeance, Thanks Gain GFTForex Oanada I know this can be personal, just looking for more input, its a steep learning curve.
Saxo Hits the Wall Lot of news in retail forex the past few weeks. In the U.S. both CMC and Bacera are closing their doors. And in Europe mega forex broker Saxo Bank has run into some serious trouble. Saxo is one of the largest firms in the currency trading world. Over the summer they spent millions of dollars sponsoring the eventual winner of the Tour De France. It now appears in hindsight that this money was woefully squandered. News reports out of Denmark are saying that Saxo has had to make hundreds of employees redundant amidst the global financial meltdown. Saxo has not come forward with details but it appears the situation is quite serious: http://borsen.dk/finans/nyhed/140626/ To make matters worse they have had to suspend a senior manager who was the prior head of Swiss broker Synthesis Bank. http://www.cphpost.dk/get/109073.html Oh boy, yet another Swiss broker finds itself under government scrutiny. How many times must I tell the trading public (and retail brokers themselves) beware Swiss forex brokers! This news following on top of the news that CMC closed its U.S. office and itself has had to make employees redundant around the world would seem to indicate that firms that are involved in the CFD business are really catching a lot of fallout from the financial panic of 08â. Developingâ¦
From what I hear he's under investigation for non-FX related issues. He's former world champion at backgammon, so I guess he likes a punt! Not so sure the wheels have fallen off at Saxo - maybe it realised it was exoanding too fast and is being sensible. Staff levels back to where they were a year ago.
Update on Saxo Bank Downsizing Despite sacking 1/3 of their work force Saxo Bank executives are reporting the company is doing quite well. http://politiken.dk/newsinenglish/article570924.ece Saxo is reporting record revenues for September, which makes the mass redundancies all the more curious. That the mass redundancies are also happening at the same time as the credit crisis adds to the curiosity factor. Developingâ¦
Bacera Moves Off-Shore Last week Bacera officially closed their U.S. office and are no longer servicing U.S. customers. It was always a long shot that they would be able to meet the increased capital requirement to $20 million so this closure comes as no surprise. But they still plan on doing business outside the NFAâs purview and are accepting customers from outside the United States. Bacera has several offices in China and most of their customers are Chinese. Will this become a trend with firms that canât meet the upcoming adjusted net capital increase? Here are the remaining firms that are still reporting Adjusted Net Capital below $10 million. If these firms are unable to increase their adjusted net capital to $10 million by the end of the month they too will have to close up shop in the U.S. Most of them should be able to do so as some, like HotSpot, have huge parent companies with ample financial reserves. But others like MG and Forex Club are in a very tough position. http://www.cftc.gov/marketreports/financialdataforfcms/index.htm <Strike>Bacera $5,448,000</Strike> MG Financial $5,545,000 Forex Club $6,709,000 Advanced Markets $6,874,000 Hotspot $7,573,000 Ikon $8,088,000 Friedberg Mercantile $8,176,000 ACM $8,395,000 Easy Forex $9,630,000